Introduction to the UNCCA UN day lecture 2022

Presented at the UNCCA UN day lecture 2022, Sydney

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Justice Rares[1] 26 October 2022

I begin tonight by acknowledging the Gadigal people of the Eora nation, the traditional custodians of the land on which we meet in Sydney today, and the other First Nations peoples on whose land those watching are, and pay my respects to their elders past, present and emerging.

It may be that Mondayitis is the explanation for today’s UNCCA United Nations Lecture occurring two days after the 74th anniversary of the United Nations Charter coming into force. Australia has had a long and proud involvement with the United Nations, from the time of promoting its formation to the present day. The former justice of the High Court of Australia, Dr HV (Bert or Doc) Evatt KC, as Minister for External Affairs played a leading role in the drafting of the Charter and was elected in 1948 as President of the General Assembly for its third session. 

The path of achieving consensus for internationally accepted norms amongst nations, while an ideal of the United Nations, is like the road to hell, often paved with good intentions.

The topic for tonight’s lecture is ‘The making of an UNCITRAL convention: the example of the Beijing Convention on the Judicial Sale of Ships’.

The idea of the convention began life, as with many maritime law conventions, with the Comité Maritime International. At its 2012 colloquium in Beijing, at which I was present, the CMI resolved to promote a convention on this important aspect of maritime law. The CMI succeeded in persuading UNCITRAL to consider its draft. In July 2022, after another long gestation, UNCITRAL approved a final version of a draft convention to put before the current session of the General Assembly. As they will explain, both of our guest speakers tonight, the Hon Neil McKerracher KC and Ms Margo Harris, played roles in UNCITRAL’s deliberations.

Judicial sales of ships have been a feature of international trade and commerce for millennia. Courts exercising a country’s Admiralty or maritime jurisdiction have used their powers to arrest or attach a ship in its waters for the purpose of enforcing maritime claims; that is claims by persons who assert a proprietary right over a ship or in personam against her owner based on ownership, a mortgage or bottomry bond, the unique concept of a maritime lien or for the supply of goods or services to the ship or her owner. Once the ship is under the control of the court the owner has two choices: first, to come to the court, usually in a foreign country, and defend or meet the claim, or, secondly, to abandon the fate of the ship to the decision of, and probable sale by, the court.

If a maritime creditor can obtain a judgment that the owner of the ship, or the ship itself, is liable for a sum of money, the court then sells the ship and every maritime creditor with a claim against her or her owner can seek to prove that claim and obtain a share of the proceeds of sale.

Obviously the price that the sale of the ship achieves is crucial. Under the rules of private international law, ordinarily a judicial sale of a ship “cleans the hull”. The intended result is that, after a judicial sale, any pre-existing maritime creditor loses the right to arrest or attach the ship because the creditor can seek to prove the claim against the proceeds of the sale. The concept of cleaning the hull includes removing the privilege or security of any maritime lien over the ship that would otherwise affect her regardless of a transfer of ownership to a bona fide purchaser for value without notice. Such a purchaser has sometimes found that because the ship collided with another ship or wharf before the purchase, there was a maritime lien over her that enabled the injured party to arrest or attach her and have her sold by a maritime court despite the new owner having no idea that the claim existed. 

A purchaser at a judicial sale is more likely to pay the best price for the ship because of the hope, but not certainty, that the court process of sale will clean the hull and remove the spectre or risk of arrest or attachment for any known or unknown claims, including maritime liens.

The achievement of the draft convention, if ratified by sufficient maritime nations, will be that differences between national systems of private international law in the recognition of judicial sales will be eliminated, at least in the States party, giving both maritime creditors and prospective purchasers of ships sold by courts certainty that the price paid for the ship will match her worth.

The global, cross-border nature of maritime commerce requires mechanisms like those in the draft convention. Such norms harmonise important commercial procedures across differing legal systems, discourage forum shopping for vessel arrests and attachments, decrease the risk that maritime creditors will be unaware of a sale or have no opportunity to make their claim against, or attaching, a ship or the proceeds of her sale and provide certainty to actual or prospective purchasers. 

With that said, may I introduce our speakers:

- The Hon. Neil McKerracher

  • The Hon Neil McKerracher KC was appointed as a judge of the Federal Court of Australia in 2007. He retired in December 2021. He was a co-convenor of the court’s Admiralty and maritime national practice area, producing numerous scholarly decisions on aspects of maritime law.
  • He also delivered a large number of appellate and single instance judgments in a wide variety of commercial and other matters. 
  • He represented the court on the executive of the Australian Judicial Officers’ Association. He chaired several professional, educational, sporting and charitable bodies including the UNCITRAL National Coordination Committee of Australia and was a former chair of UNCCA Ltd.
  • From 2019 to 2022 he was the International Judges’ Association representative in UNCITRAL Working Group VI that negotiated the draft convention the subject of tonight’s lectures. 
  • He is a mediator and arbitrator and is a member of Francis Burt Chambers in Perth.

- Margo Harris

  • Ms Harris is a commercial barrister at the Victorian Bar. She has expertise in international trade and maritime law. 
  • Ms Harris, when a solicitor, acted for the applicant in Bayside Airconditioning Pty Ltd v The Owners of the “Cape Don” [1997] FCA 690, where Cooper J ordered the judicial sale of the ship. The case remains an authority for judicial sale of ships in Australia.
  • Ms Harris attended each of the UNICTRAL Working Group VI sessions on behalf of the observers, LawAsia and UNCCA. During that time, she became Chair of UNCCA’s Expert Advisory Committee on Working Group VI. She is currently finalising a chapter on the Convention for the International Effect of Judicial Sale for Elgar’s Companion.

[1] A judge of the Federal Court of Australia, an additional judge of the Supreme Court of the Australian Capital Territory, and a judge of the Supreme Court of Norfolk Island. The author acknowledges the assistance of his associate, Laura Heit, in the preparation of this speech. The errors are the author’s alone.

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